Whatever your reasons for selling a business, it can be a lengthy and complicated process, whether the sale involves the sale of business assets or shares.
The seller and the buyer should consider which of these two options is best for them, as there are a number of implications for each.
The owner or owners of an incorporated business may sell all shares in the company. This results in all of the company’s assets, rights and obligations transferring to the purchaser.
Unlike an asset purchase, this transaction is between the buyer and the seller, rather than the buyer and the company. Unless it is agreed that the seller will continue to have a role in the company, the seller will cease to have any ownership of any part of the business.
The advantage of a share purchase or share sale is that, from the outside, the company may appear relatively unchanged. The business can operate as it did prior to the sale and customers and suppliers are likely to be happy to continue their relationship with the company as before.
In a sale of business assets, the business entity will remain with the sellers and the purchaser instead buys only the assets of the business. This can include property, equipment, client lists, trademarks and copyrights etc.
Liabilities of the business are retained by the owners of the business. These liabilities can then be cleared separately and the owners can also then strike off or close the company.
It’s important to work with advisers to ensure that it’s clear which assets are being purchased and the pricing is fair.
The advantage of this is that it can mean a quicker sale with some tax advantages. There is also less requirement for due diligence.
The transaction is between the buyer and the company, rather than its owners.
Due diligence is an essential part of buying a business. This stage will enable a buyer to gain as much information as possible about the business they are hoping to purchase. Our experts have a wide range of experience in carrying out financial due diligence to ensure that our clients can make an informed decision.
At Duncan & Toplis, we support buyers and sellers of businesses to ensure that they remain compliant at every stage of the process. We can help you get the best deal, providing you with expert insights and advice for as long as you need. Contact us today if you are planning to buy or sell a business.
